Timothy B. Lee has been doing a lot of excellent reporting at Wonk Blog about our broken intellectual property system. At first, I was highly skeptical of Lee. Maybe it was unfair, but he used to work at the Cato Institute and my experience is that most libertarians have a blind spot when it comes to these issues. But he clearly understands the warping effects of these laws. At this point, things are so out of control that the system could be greatly improve before we would disagree on how best to move forward. In the end, I think that a socialistic approach to intellectual property is the best, and I doubt that Lee would agree. However, I’m in favor of a voluntary system; the big Hollywood studios could keep their copyrights. But a good solution to the problem would require that tax dollars go to support the system.
Lee’s latest IP article discussed the outrageous ruling of the US Court of Appeals for the Federal Circuit—for the second time! As he reported, “A firm called Ultramercial claims to have invented the concept of showing a customer an ad instead of charging for content.” This would be like thousands of years ago someone claiming that he invented the concept of exchanging goods for services and mandating that everyone pay him for his “invention.” Last year, the Appeals Court found the same way and the Supreme Court slapped it down and told it to reconsider the case. And they did: they found that they were right the first time.
Our patent and copyright system has degenerated to a point were it is little more than a legal maneuver. The idea of “showing a customer an ad instead of charging for content” is something we’ve had since at least the invention of newspapers. In this case, the court found that the “invention” wasn’t abstract enough to not qualify for protection. What I don’t understand is how this ruling can be seen as furthering any interests except that of Ultramercial, which is clearly just a patent troll. The justification for patents is that they encourage innovation. This ruling does exactly the opposite.
When I see rulings like this, all I can figure is that the justices are in way over their heads. They really don’t understand how the economy works and they don’t get innovation at all. They must see it as nothing but a legal strategy and may the best lawyer win. But the law is not supposed to be a game. Patents distort the market, but maybe that is okay because the benefits outweigh the deficits. But vague and obvious patents like the idea of advertising on the internet distort the market so much that they encourage litigation and discourage innovation.
The good news is that there is a decent chance that the Supreme Court will hear the case. Lee reported:
But it doesn’t make me feel too good that there is so much damaging thinking in our legal system. There is a tendency on the part of conservatives especially to blame our litigious society on the poor. But the real problem we have is in the business community where we have true takers like Ultramercial who add nothing but demand their rents.
